Long Tail Marketing

Explore the Strategy of Long Tail Marketing

In many retail environments, a small group of popular items dominate a store’s sales, such as new releases of anticipated movies, books, or video games. Many stores automatically promote these already popular items, trying to attract as many customers as they can before their competitors do. Meanwhile, their other inventory continues to sell, without special promotion—but as no single one of these items makes a big impact, the group as a whole may be neglected.

However, some stores carry such a variety of inventory that their less popular items, in total, actually make up the bulk of sales. If they were to plot the number of sales of each individual product, they would see a distribution curve with a dominant “head” in the front, followed by a “long tail” of other products.

What is long tail marketing?

Long tail marketing concentrates on these less popular products, developing a business sales model based upon products in the “long tail.” While many marketing strategies focus on promoting a specific product or brand, long tail marketing involves more inventory management than product promotion (See also Product Marketing). By providing a greater variety of inventory (extending the long tail), businesses hope to reach more customers and generate more total sales.

The Value of Long Tail

In this sample distribution of product sales, the many less popular items making up the “long tail” sell as many items total as the few most popular.

Who employs long tail marketing?

Long tail marketing is most effectively employed by online retailers (e-tailers) such as Amazon and Netflix, due to the supply-side considerations of managing such an inventory (See also E-Commerce Marketing). A brick-and-mortar video rental store or bookstore only has so much shelf space available, and must devote a significant amount of that space to stocking enough of the most popular items to meet demand. Less popular items compete with each other for limited space, and greater variety increases costs in time and energy in stocking and sorting.

In contrast, Amazon and Netflix stock items in centralized warehouses, while displaying them on a virtually unlimited sales floor (their website), resulting in a much lower cost for shelf maintenance. Web-page maintenance has its costs, but they are substantially lower than physically sorting, stocking, and maintaining shelves. Meanwhile, sellers of digital products such as iTunes, or Amazon’s Kindle books don’t even require warehouse space, further reducing the maintanance costs.

In addition to Internet commerce, the principles of long tail marketing are also applied by microfinance businesses who offer smaller loans to large groups of people throughout the world. A loan of less than $100 is enough to start a business in many places. These customers, who often have no established credit history, have long been ignored by traditional banks; but now represent a significant niche market, and an important component of economic growth in many regions of the world, including Africa and Southern Asia.

For what kinds of customers is long tail marketing effective?

The long tail marketing model allows a business to expand its customer diversity. By definition, no long tail is made up of only a single consumer segment, but will rather represent a great number of different consumer segments—and the longer the tail, the greater diversity of customers (See also Diversity Marketing).

The variety of product offerings allows a business to attract more cultural groups (for example, by having more offerings in their language, or otherwise suitable to their tastes). Additionally, it allows a business to reach more niche customers, whose interests are outside of the mainstream sales, but make purchases within their interest areas. Meanwhile, online businesses do not have the geographic perimeters that brick-and-mortar stores have, so they may reach customers anywhere there is Internet connectivity.

How is a long tail marketing campaign developed?

Long Tail Marketing and SEO

Like product inventory, keywords used on search engines also have a long-tail distribution. In terms of website Search Engine Optimization, this means that a website may actually get more hits by using less popular—but more specific—keywords.

A website may have hundreds or even thousands of competitors for the most popular keywords. This makes it very difficult to rank on the first page of a search, which is a difference of millions of hits. However, those same websites may only have a handful of competitors for a less popular set of keywords.

In order to market to the long tail, a business has to first have/develop the capability to manage an extensive inventory. Maintaining popular products cannot be ignored by a business seeking to develop its long tail market, as being unable to provide a wanted product to an interested customer not only misses a sales opportunity but risks losing that customer to a competitor on future purchases. Therefore, developing the long tail does not mean replacing popular inventory with a variety of less popular products, but instead supplementing that inventory. This can be done to a greater extent as the costs of storing and distributing inventory fall.

E-tailers selling digital products have very low costs for storage and distribution. Those selling physical products develop efficient warehouse management techniques in order to acquire, store, track, and mail inventory to consumers. Developing a tracking system is key, as establishing PAR (ideal inventory amounts) for items sold infrequently can be more difficult due to lack of data.

In order to convert increased inventory to sales, items need to be easily found by customers. Therefore, the most important component of developing long tail sales is to have a catalogue/search system that allows users to easily find products and get information about them. Every new product added to inventory has to be added to the database not only by title and category, but also with a number of descriptive search tags that enable it to be located by customers browsing the online sales floor.

Creating a method of encouraging consumer reviews is another way to get information to interested customers, as is providing digital previews of products. A company can further leverage long tail buying with recommendations software (like Amazon’s “customers who purchased this item also bought…”). Ease of access in terms of information is important for maintaining the long tail against the competition of smaller niche sellers, who may be able to provide a greater depth of information. But done effectively, a single seller’s website can be preferable to consumers than keeping track of multiple independent niche websites, all with varying levels of service and reputation. (See also Closed-Loop Marketing)

What career titles work with long tail marketing strategies?

Marketing Managers

Marketing Managers advise and make decisions regarding a company’s business model (including product, pricing, and distribution) as well as promotional activities.

What do they do?

evaluate their client’s sales distribution, and the viability of pursuing the long tail market

coordinate the various teams involved in developing the long tail, including purchasing teams, distribution teams, and website development teams

monitor the product turnover in the long tail, and the development of niche sectors

Education and experience

What type of salary should I expect?

Marketing Manager
Median annual pay: $116,010
Top 10%: $187,199+

Market Research Analyst
Median annual pay: $60,250
Top 10%: $112,560

Source: U.S. Bureau of Labor Statistics

Marketing managers typically have at least a bachelor’s degree in marketing or business management. They have several years experience managing teams, as well as a track record of success in a background like sales, purchasing, or advertising. Education preparing them for this career includes classes in marketing, market research, statistics, and business management; in between (or during) semesters, they will often participate in an internship to establish initial experience.

Internet Marketing Managers

Internet Marketing Managers develop the online aspects of a company’s business strategy.

What do they do?

advise on developing the company website, encouraging ease of access for customers

implement online tools to develop the long tail, such as recommendation software

use blogs, RSS feeds, pay-per-click advertising, and demand-side platforms to promote product offerings throughout the long tail

Education and experience

Internet marketing managers should have at least a bachelor’s degree (often in marketing, advertising, or business management) and substantial experience in online commerce, including advertising and sales). They need to be familiar with computer information systems, and software for tracking customer traffic on a website. Education preparing them for this career includes classes in marketing, market research, statistics, and website development.

Market Research Analysts

Market Research Analysts gather data about the diverse market segments found in the long tail.

What do they do?

use a variety of methods (particularly online tracking) to gather data on customers’ purchasing behavior, and how they interact with the company website; and then analyze this data, employing statistical methods and software

monitor the development of niche markets in the long tail, and the strength of the company’s position in these markets vis-à-vis niche sellers

use data and statistical analysis to make predictions regarding the return on investment, in order to develop long tail sales across a proposed expansion in inventory

Education and experience

Analysts need at least a bachelor’s degree in market research (or related field, such as statistics or computer science); they may also have a minor in business organization and management. Usually they complete an internship while in school, and will gain additional experience in jobs which require collecting and analyzing data (particularly online data), and representing their findings in reports.

How can a marketing school help you in this field?

Effective long tail marketing requires an understanding of all aspects of a business, including organization, managing costs, and evaluating its position in the market.

Your marketing program will teach about aspects of business organization and management, including product development, distribution, pricing, and promotion. You will learn how to drive both sales and profits, and how to measure returns on investment. You’ll also learn basic leadership skills required to coordinate and manage teams, and how to align their personal goals with the company’s goals.

A marketing program will also train you to better understand your customers. Economics courses will teach you to identify and respond to supply and demand—including the lower, but more extensive demand (in aggregate) available in the long tail. Courses in market research will teach you how to segment consumers and identify market opportunities (such as niche markets). Courses in consumer behavior will train you to predict how customers will respond to different strategies, such as automated recommendation. (See also Consumer Psychology)

Additionally, most marketing programs will emphasize the development of communications skills. You’ll learn how to use both verbal and graphic messages, and how to use multiple methods to engage an audience. Additionally, you’ll learn how to use social networks and virtual communities to spread a message, as well as how to leverage viral marketing.

To learn more about what a marketing school can do for you, request information from schools with degrees in marketing. Begin expanding your own skills inventory, in preparation for an exciting and opportunity-filled career.